European Union Emissions Trading Scheme (EU-ETS)

Conflict Grows Over EU-ETS

November 4, 2011

On November 2, the world moved closer to a confrontation over the European Union’s proposed Emissions Trading Scheme (EU-ETS), a plan to charge civil aviation operators for carbon emissions from their aircraft. Some policymakers in the U.S. have called the plan an EU “money grab.” Other nations promise to retaliate, even as the International Civil Aviation Organization (ICAO) tries to broker an acceptable solution for all parties.

‘New Delhi’ Letter Adopted

ICAO Wednesday added to mounting pressure on the European Union to exclude non-EU aircraft from the ETS by adopting a working paper put forth by the U.S., China and two dozen other nations that signed onto the “New Delhi Joint Declaration” – an international rejection of the EU’s unilateral plan to tax carbon emissions.

ICAO issued a non-binding statement approved by 26 of the international body’s 36 member states, urging the EU not to include flights by non-EU operators in the ETS, which is scheduled to begin on January 1, 2012. Although the program formally begins in January, operators are not required to submit verified emissions reports until March 2013. Current plans call for “carbon tax” payments to be due in April 2013 based on each operator’s level of flight activity.

NBAA, along with other aviation groups, has continued to voice strong opposition to the ETS. Many of those groups have called for urgent action to prevent a disruption of both trade and tourism they believe could be at hand as the political conflict over EU-ETS continues to escalate.

Countries outside the EU say the plan would violate the 1944 ICAO pact giving each nation sovereignty over its own skies. The EU-ETS would tax flights from their point of origin rather than from the point they enter European airspace, in effect, taxing flights in airspace outside the EU.

The European Union, however, appears determined to go ahead with ETS in spite of mounting worldwide opposition.

"It is disappointing that ICAO discussions once again focus on what States should not do instead of what they should do to curb growing aviation emissions," said EU Climate Action Commissioner Connie Hedegaard. She promised that the ICAO declaration would not stop attempts to include aviation activities under the auspices of EU-ETS.

NBAA Members Caught In the Middle

American business aircraft operators in have watched these events unfold with growing concern, especially in light of House Bill 2594, the “EU-ETS Prohibition Act of 2011.” That measure, sponsored by House Transportation and Infrastructure Committee Chairman John Mica, would make it illegal for U.S. operators to participate in EU-ETS. The measure has been welcomed by aviation groups, including NBAA.

But Paul Anderson, Flight Manager for NBAA member United Technologies Corp. (UTC), called the brewing trade battle “interesting” – to say the least.

Suppose the measure passes the Senate and is signed into law by President Barack Obama, he postulated.

“If we do participate, we’re violating U.S. law. If we don’t participate, we’re violating EU law. So I’m not quite sure how all that would play out,” Anderson mused. If H.B.2594 becomes law, he said, “I go to my legal counsel and ask, ‘What do I do?’ Do we not fly to Europe? So much of our business is in Europe. But we might have to take the conservative action and not fly to Europe.”

Already, his company is complying with EU requirements to monitor, report and verify carbon emission numbers and he plans to continue that until a final decision on the ETS is made

“If you don’t comply, EU member states could certainly take enforcement action against operators,” Anderson noted. For now, UTC is complying with EU monitoring and verification requirements. NBAA is advising all members to do the same.

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